February 5, 1993 [NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT
No. 92-1349
PETER GRABLER,
Plaintiff, Appellant,
v.
ISRAEL ROIZMAN, ET AL.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. William G. Young, U.S. District Judge]
Before
Selya, Cyr and Boudin, Circuit Judges.
Peter Grabler on brief pro se.
Brian P. Flaherty and Wolf, Block, Schorr and Solis-Cohen on
brief for appellee Israel Roizman.
Per Curiam. On March 7, 1991, appellant Peter Grabler, a
resident of Massachusetts, filed a complaint against appellee Israel
Roizman, a resident of Pennsylvania. Jurisdiction was based on
diversity of citizenship. Grabler essentially claimed that Roizman
had breached an agreement to purchase all of Grabler's shareholdings
in Benchmark Broadway Corporation and Benchmark Developers, Inc.
Among other forms of relief, Grabler requested damages (unspecified)
and an accounting. He also included allegations that Roizman had
committed fraud, engaged in economic duress and had violated M.G.L. c.
93A and Section 10(b) and Rule 10b-5 of the 1934 Securities Exchange
Act. The details of the complaint are not relevant to this appeal
because Roizman agreed to pay Grabler approximately $96,000 for the
stock.
In May 1991, Roizman filed an answer and a counterclaim. The
counterclaim, which essentially forms the basis for this appeal,
concerns the deterioration in the business relationships among
Grabler, Roizman and a third person, David Kohen. These three
individuals are the sole shareholders in Benchmark Properties
Corporation ("Benchmark").* Benchmark is in the business of real
estate development. Specifically, it is a general partner in two
housing projects -- Elm Hill Limited Partnership ("Elm Hill") and Blue
Hill Limited Partnership ("Blue Hill"). Benchmark has a 50% interest
in each project. The other general partners are Benchmark Financial
Group, Ltd. ("BFGL") and an individual, Frank Jones. Each project
also has a limited partnership as its limited partner. Grabler and
Kohen are the sole shareholders of BFGL.
*Grabler and Kohen are directors of Benchmark; Roizman holds no office. All decisions concerning Benchmark must be by a unanimous vote of the three shareholders.
In June 1991, the parties reached a final settlement and the case
was dismissed. Paragraphs 2 through 4 of the settlement concern how
much Roizman owed Grabler for the stock purchase and how Roizman was
to effect payment to Grabler. Paragraph 7 of the settlement stated:
After Grabler and Roizman have reached agreement regarding the allocation of expenses and partnership distributions in connection with Elm Hill Housing Limited Partnership, Blue Hill Housing Limited Partnership and Benchmark Properties, Inc., Grabler shall add Roizman as a required signatory on the Massachusetts escrow account, as well as all savings, checking and other banking accounts maintained by Elm Hill Housing Limited Partnership, Blue Hill Housing Limited Partnership and Benchmark Properties, Inc. Grabler and Roizman agree that they will proceed in good faith to affect [sic] a resolution of this issue.
Unfortunately, the obligation to use good faith failed to ensure the
settlement of the disputes concerning Elm Hill, Blue Hill and
Benchmark pursuant to the above paragraph. Also in dispute was
whether Grabler was due interest on the payment for the stock
purchased by Roizman. Thus, on October 15, 1991, the district court
granted Roizman's motion to reopen and set the case for hearing.
The specific claims presented at that time by Roizman were as
follows: (1) Grabler and Kohen caused Benchmark to pay all of certain
expenses incurred by Blue Hill and Elm Hill, despite the fact that
Benchmark only had a fifty percent interest in each project, and the
excess costs should be deducted from the profits of Blue Hill and Elm
Hill; (2) Grabler and Kohen each received salaries from Benchmark to
which they were not entitled and, having reimbursed Benchmark for part
of the salaries, still owed Benchmark approximately $23,000; (3) Blue
Hill incurred expenses for deleading and $18,200 of these expenses
were "double deducted" from the profits of Blue Hill; (4) Benchmark
paid for Grabler's personal phone calls in an estimated amount of
$2563; and (5) Benchmark, at the end of 1989, had $50,529 in
development cash (profits from both Elm Hill and Blue Hill) which
should have been distributed to the Benchmark shareholders, Roizman
being entitled to one-third of that amount.
The district court ultimately found in Roizman's favor on these
five claims, holding that he "is owed the sum of $37,335 as the
appropriate allocation of expenses and partnership distributions in
connection with Elm Hill Housing LP, Blue Hill Housing LP and
Benchmark Properties Corporation ("BPC") . . . ." See Order and
Judgment, 2. This order also provided that
[s]ubject to making provision for the payment of the reasonable expenses of BPC in the ordinary course of business, Peter Grabler and Israel Roizman are directed to take all appropriate action to effect the prompt payment of $37,335 to Israel Roizman from the future profits of BPC, such payments to be arranged in such fashion as to have the same economic effect as if these payments had been made in the ordinary course.
Id. 3. The judgment finally stated that if Grabler and Roizman were
not able to agree on a method to effect the payment of $37,335 to
Roizman, the court would appoint an independent auditor to recommend
how the payment should be made. Id. 4.
DISCUSSION
Grabler attacks the district court's findings on four out of the
five claims asserted by Roizman.** He also argues that he should
have been awarded interest on the $96,000 owed to him for Roizman's
failure to pay for the stock. We review the district court's factual
findings under the clearly erroneous standard.
"If the district court's account of the evidence is plausible in light of the record viewed in its entirety, the court of appeals may not reverse it even though convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently. Where there are two permissible views of the evidence, the factfinder's choice between them cannot be clearly erroneous."
Anderson v. Beatrice Foods Co., 900 F.2d 388, 392 (1st Cir.) (quoting
Anderson v. City of Bessemer City, 470 U.S. 564, 573-74 (1985)), cert.
denied., 111 S.Ct. 233 (1990). In this case, which depends heavily on
the inferences to be drawn from conflicting views of the facts, we may
not substitute our opinion as to conclusions reached by the district
court absent clear error. Id. at 392. Keeping this standard in
mind, we turn to the disputed findings.
A. The Counterclaims
1. Roizman asserts that during 1988, 1989 and 1990 Benchmark
incurred certain expenses connected with its operation of Elm Hill and
Blue Hill. Pages D, E and F of Trial Exhibit 6 reflect these costs
for each year. In total, Benchmark paid $221,454 for the years in
question. Roizman's basic claim is that Benchmark should have been
** Grabler does not challenge on appeal the district court's conclusion that, at the end of 1989, Benchmark should have distributed to the shareholders $50,529 as profits. Issues not raised on appeal are waived. Cf. Pignons S.A. de Mecanique v. Polaroid Corp., 701 F.2d
1, 3 (1st Cir. 1983) (issues not presented in initial brief are waived). As for Grabler's contention that Roizman did not have "clean hands," it was not raised below and is thus forfeited on review. Johnston v. Holiday Inns, Inc., 595 F.2d 890, 894 (1st Cir. 1979).
charged for only half of this amount because it only had a fifty
percent interest in each project. That is, Elm Hill and Blue Hill
should have absorbed half of these expenses. As Roizman explained
during trial:
The basis is as follow[s]: When in this industry of low income housing when you have a partnership [Benchmark] that operates two projects, and that's it, and this partnership is supposed to get income for management fee[s], but does not receive any management fee because the project is not healthy financially to pay the management fee, and there is an expense of rent, taxes, interest, copying, office supply, and everything else that shows in RD, E and F. When you don't have an income to this project, to this company, there is someplace where the money has to be paid from. And the only place where the money can be paid is from profit that comes in from the two entities and that's Elm Hill and Blue Hill.
App. I, Tab 1, at 40.
As a result, Roizman concludes, the profits of both limited
partnerships should have been reduced by their respective shares of
the $221,454 in expenses incurred by Benchmark. Accordingly, Note #1
on page A of Trial Exhibit 6 reflects a deduction in the profits of
Blue Hill of $112,942. Similarly, Note #1 of page B of Trial Exhibit
6 shows a reduction in Elm Hill's profits of $108,512.***
Grabler claims that these calculations are wrong. He first
argues that because Benchmark was running projects in addition to Blue
Hill and Elm Hill, see Trial Exhibit 6, at pages J and K, these other
projects also should have absorbed some of Benchmark's costs. Although
not entirely clear, Roizman's accountant, Stuart Briefer (who also had
been the accountant for Benchmark and the limited partnerships),
testified that the costs listed in Trial Exhibit 6 were not all of
Benchmark's costs for the years 1988-1990. App. I, Tab 2, at 64.
***Although Benchmark has a fifty percent interest in each project, Blue Hill was charged with fifty-one percent of Benchmark's costs and Elm Hill was charged forty-nine percent. There is no explanation for this difference but, in any event, it is not challenged on appeal.
Rather, the inference from the testimony is that the amounts on pages
D, E and F were Benchmark expenses that related solely to Elm Hill and
Blue Hill. Id. at 64-65. Grabler did not submit any evidence that
would contradict Briefer's testimony.****
Next, Grabler contends that an independent auditor's report, see
App. III, Tab 7, at 7 and Tab 8, at 9, demonstrates that Blue Hill and
Elm Hill each paid about $57,811 for their own respective
organizational costs. However, Grabler did not point to any
documentary or other evidence that this money was spent on the same
items listed on pages D, E and F of Trial Exhibit 6. Indeed, there is
no explanation concerning exactly how the independent auditor's report
relates to the payment of Benchmark's expenses.
Grabler also alleges that Benchmark in fact received income in
the form of management fees for 1988-1990, but assigned this income to
another company, Benchmark Apartment Management Corp. As Grabler
never put in evidence any agreements concerning the assignment of such
fees or any documents indicating the dollar amounts of these fees, we
cannot say that the district court's decision to credit Roizman's view
of the evidence was plainly wrong.
2. Roizman claims that $18,200 -- which reflects a payment for
deleading at the Blue Hill housing project -- was erroneously "double-
deducted" from the profits of Blue Hill. Thus, as reflected on page A
of Trial Exhibit 6, $18,200 was added to the calculation of Blue
Hill's profits. To support his position, Roizman relies on a document
entitled "Calculation of Syndication Profits," Exhibit RO, #5, and a
****Similarly, Grabler's claim that there were no charges for ordinary expenses such as telephone, rent and copying listed on the pages concerning these other projects seems irrelevant, without more, to the question whether Elm Hill and Blue Hill should have been charged with some of Benchmark's expenses.
record of Syndication Account Transactions for Blue Hill. Trial
Exhibit 7, at 4.
It is undisputed that Blue Hill has two accounts -- syndication
and operations. Under this arrangement, the operations account is
funded by the syndication account. It also is undisputed that most of
the expenses for the deleading were paid from the syndication account,
except for the $18,200 which, for some reason, was paid from the
operations account. According to Briefer's testimony, in calculating
Blue Hill's profits, one of the expenses listed in RO #5 is an
"operating deficit" of $75,000. App. I, Tab 3, at 17-19 and App. II,
Tab 1, at 17-20. However, this deficit was reduced by $18,200 -- the
amount for deleading which had been paid out of the operations
account. Id.
Although not free from doubt, it appears that Roizman is arguing
that the "double deduction" occurred when $75,000 was wired from the
syndication account to the operations account in December 1990. See
Trial Exhibit 7, at 4. Briefer testified that only $56,800 should
have been transferred. App. I, Tab 2, at 61. As a result, not only
did the operations account lay out $18,200 for deleading, but by
transferring the full $75,000, the syndication account also was
charged $18,200.
Grabler first argues that Exhibit RO was never admitted in
evidence and that, in any event, it was "superseded" by Exhibit 7.
Exhibit RO contains the underlying documents from which Trial Exhibit
6 was prepared by Roizman and Briefer. The district court admitted
Exhibit 6 in evidence on the second day of trial. App. I, Tab 2, at
32. It later described RO as "part of exhibit 6," App. I, Tab 2, at
59, and referred to it during the course of the trial. As such, it is
plain that RO was considered as admitted in evidence by the district
court.
As for Exhibit 7, it is a memorandum, dated September 20, 1991,
from Kohen to Roizman. Page 4 reflects Blue Hill syndication account
transactions for 1990 and 1991. Grabler points out that Exhibit 7
does not list $18,200 as a deduction. He then makes the observation
that RO #5 reflects only an "estimate" of Blue Hill syndication
profits. From this he concludes that the $18,200 was accounted for
only once -- when it was paid out from the operations account.
Based on the evidence and testimony, we think that the district
court's decision to credit Roizman's explanation was not clearly
erroneous. Exhibit RO #5 was prepared on February 8, 1991. At this
time, the operations account already had paid the $18,200 for
deleading. Indeed, according to Grabler, the operations account paid
this amount in December 1990. This is the same time that $75,000 from
the syndication account was wired to the operations account. See
Trial Exhibit 7, at 4. To this extent, it appears that the
calculation concerning the operations deficit of $56,800 (the $75,000
minus $18,200) is not an estimate.
3. Roizman's claim that Grabler and Kohen agreed to return to
Benchmark salaries they had received is well supported by the
evidence. In fact, in his brief, Grabler candidly admits that he and
Kohen "repaid all but $7,800 of the salary they had each received in
1989" to Benchmark.***** Appellant's Brief, at 33. This
admission lends direct support to Roizman's contention that Kohen and
***** Grabler's argument that he and Kohen each retained $7,800 because Roizman allegedly received $7,800 in extra salary is not relevant to the question whether an agreement concerning repayment existed.
Grabler had, in fact, agreed to repay the salaries they had received
in 1989. In the absence of any evidence to the contrary, the district
court's finding that Benchmark still is owed approximately $23,000 for
salary reimbursement is not clearly erroneous.
4. Roizman claims that during 1988, 1989 and part of 1990
Grabler charged all of his personal calls to Benchmark. To support
this assertion, Roizman submitted four cellular one phone bills dated
November 11, 1988, January 8, 1989, July 6, 1989 and September 7,
1989. According to Briefer's testimony, see App. I, Tab 1, at 65-70,
he reviewed the above bills, identified Grabler's personal phone
charges, added them up, determined an average monthly figure and
multiplied it by the number of covered months. Page L of Trial
Exhibit 6 contains Briefer's calculations. It reveals that based on
the four phone bills, the average amount of personal phone calls is
$82.66. Thus, for the period June 1988 to December 1990, Benchmark
allegedly paid approximately $2,563 for Grabler's personal phone
calls. Page H of Trial Exhibit 6, which contains the summary of how
the profits of Benchmark should be adjusted, therefore indicates that
Grabler owes Benchmark $2563. Grabler first argues that the claim
must fail because the telephone bills should not have been admitted in
evidence under Fed. R. Evid. 1006 (admission of summaries). Second,
he points out that Briefer testified that he had no recollection
concerning whether Benchmark actually had paid these bills. App. I,
Tab 3, at 25. Indeed, Briefer stated that he could not "recall what
entity paid for the bills." Id. We believe that, even under the
clearly erroneous standard, this claim must fail. Therefore, we do
not address the evidentiary question.
Simply stated, how much Roizman might be due in damages would
depend on which entity paid the phone bills. Assuming Roizman's
figures are accurate, and Grabler owes Benchmark $2,563, Roizman might
be entitled to recover as much as one-third. However, if Blue Hill,
Elm Hill or some other entity paid these bills, the $2,563 repayment
would not go directly to Benchmark. As a result, Roizman would not
receive one-third. For example, if one of the limited partnerships
paid the phone bills, Grabler would reimburse the limited partnership,
and Benchmark, as a fifty percent owner, might be entitled to as much
as one-half of $2,563 or $1,281.50. Roizman's share would be reduced
to approximately $427. As Roizman failed to establish who paid the
phone bills, on the present record it is impossible to calculate the
amount of any damages due.
B. Interest on the Stock Transaction
The final order of the district court regarding the disbursement
of the purchase price of the stock (which had been held in the
registry of the district court), stated, subject to certain
preconditions not relevant to this appeal, that
the sum of $96,333.84 shall be released by the Clerk from the Registry of this Court to Peter Grabler, representing final
payment to Grabler for his 100 shares of common stock of
Benchmark Broadway Corporation and Benchmark Developers, Inc., each, pursuant to paragraph 2 of the Stipulation of 6/28/91.
Order of Court, dated November 1991, reproduced in App. III, Tab 17
(emphasis added).
Grabler argues that the November 1991 Order only applies to
paragraph 2 -- the underlying obligation of Roizman concerning the
purchase price for the stock -- and not to paragraph 5 which, he
asserts, addresses interest on the purchase price. Grabler also avers
that contrary to Roizman's statement in Roizman's draft order (which
the district court adopted) he (Grabler) never agreed to the language
in Roizman's draft. Grabler points out that the draft order he
submitted to the court, App. III, Tab 18, did not specify that the
$96,000 was a "final payment."
We are unable to ascertain any basis in the record for Grabler's
claim that he is due interest on the purchase price for the stock
notwithstanding the final judgment of the court.******
Specifically, he has not carried his burden of demonstrating that
paragraph 5 of the June Stipulation applied to the stock purchase. In
any event, it is not clear from the record how such interest would
have been calculated and Grabler, in support of his claim to interest,
has not even established the period during which such interest would
have accrued. Consequently, we decline to disturb the final judgment
of the district court regarding this claim. C. Rule 19
Grabler finally argues on appeal that the district court failed
to join Kohen, Benchmark, Blue Hill, Elm Hill, BFGL, Jones and the
limited partners of Blue Hill and Elm Hill as indispensable parties
under Fed. R. Civ. P. 19. We note in this context that Grabler never
filed a Rule 19 motion for joinder. Nonetheless, the district court
was aware that it had only Grabler and Roizman before it when it
entered judgment and acknowledged that it was directing enforcement of
******Indeed, the only reference the district court made to an interest claim by Grabler was its statement that it was not persuaded that Roizman was required to pay interest on the sum of $102,441. App. II, Tab 2, at 101, which amount appears to relate to the Flipper Temple deal in Atlanta, not the stock purchase agreement between Grabler and Roizman.
the June stipulation between Grabler and Roizman.******* For
the reasons stated below, it would be premature to address Grabler's
Rule 19 claim at the present time.
First, Grabler specifically promised to exercise "good faith"
efforts to reach an "agreement regarding the allocation of expenses
and partnership distributions" in connection with Benchmark and the
limited partnerships. June Stipulation, 7. He entered into the
stipulation, which the court treated as an enforceable contract at
trial, knowing that the resolution of the accounting disputes might
require action on behalf of Benchmark, Blue Hill, Elm Hill and others.
Second, after both Grabler and Roizman filed post-trial motions
* * * * * * * Now, it's important to understand that there are before the Court only Mr. Grabler and Mr. Roizman. None of the corporations have been joined and Mr. Kohen has not been joined. The Court infers, but makes no finding, that one of the reasons these parties were not enjoined was it would destroy the diversity jurisdiction . . . which is necessary for this Court to act and the disputes arising out of the settlement agreements would then have to be disposed of in the state court.
App. II, Tab 2, at 94. As for Grabler's ability to effect the judgment, the district court stated:
[W]hile it's certainly appropriate for me to resolve all matters as between Mr. Grabler and Mr. Roizman and indeed equitably to make sure that those two parties who are before the Court give effect to the Court's judgment, I have no right to enter orders, nor have I yet entered . . . any order against Mr. Kohen. . . .
. . . .
So, I can imagine saying, and correct me, that the accountings shall be as I decreed them and I order the parties before the Court to give effect to the accounting resolution that I have made and leave it at that.
Id. at 67.
requesting enforcement of the court's final order, Roizman's counsel
filed a letter with the court indicating that "the parties have been
able to agree in [sic] the manner in which to carry out the Court's
Order." Thus, it appears that the means are available with which to
enable Grabler to effect payment to Roizman. Even if any Rule 19
claim has not been waived, it clearly was not addressed below, and is
unripe for review. For the present, therefore, issues relating to the
enforcement of the district court order are properly presented to that
court in the first instance.
For the foregoing reasons, the case is remanded to the district
court for further proceedings consistent with this opinion. The
judgment of the district court is affirmed, except as concerns the
award of $2,563 to Roizman. SO ORDERED.